The upshot is that both parties champion the 1 percent, the Republicans gleefully and the Democrats sheepishly. Both parties have worked together to gut the tax code. Companies use accounting tricks approved by the IRS to shift their profits to foreign tax havens. Hedge-fund managers and recipients of long-term capital gains pay only 15 percent top tax rates. As a result of these irresponsible tax policies and rampant tax evasion, tax collections as a share of national income have sunk to 15 percent, the lowest in modern American history.

...

The lowest macroeconomic misery is in Northern Europe. Norway has the lowest score, followed by Switzerland, Luxembourg, Netherlands, Sweden, Germany, and Demark. All seven countries have lower unemployment rates, smaller budget deficits as a share of GDP, and lower foreign deficits as a share of GDP, than the U.S. We look pretty miserable indeed by comparison.

Yet, miracle of miracles, these seven countries collect higher taxes as a share of GDP than does the U.S. Total government revenues in the U.S. (adding federal, state, and local taxes) totaled 31.6 percent of GDP in 2010. This compares with 56.5, 34.2, 39.5, 45.9, 52.7, 43.4, and 55.3 percent of GDP in Norway, Switzerland, Luxembourg, Netherlands, Sweden, Germany, and Denmark, respectively. ...

... In five of the seven countries, Denmark, Germany, Norway, Netherlands, and Sweden, government spending as a share of GDP is much higher than in the U.S. These countries enjoy much better public services, better educational outcomes, more gainful employment, higher trade balances, lower poverty, and smaller budget deficits. High-quality government services reach all parts of the society.

I currently think it is absolutely essential that the US cut spending, so Sachs's data is very interesting. I've noticed several progressive writers using northern European countries as an example to show that conservatives are wrong about economics, so this is something that must be addressed. If it can't be, then conservatives need to rethink their economics. (And, of course, so do I.)

Wednesday, November 23, 2011

A Caveman Won't Beat a Salesman -- Peggy Noonan discusses Steve Jobs' theory of decline in business and applies it to American politics, where, she claims, we have elevated salesmen over people who know how to get things done. She then, quite sensibly, tells us why Republicans aren't anti-government:

Republicans don’t hate government, but they’re alive to what human beings are tempted and even inclined to do with governmental power, which is abuse it. And so they want that power limited. It’s not really that complicated. Democrats may try to paint it one way, but when they do, Republicans shouldn’t help them. They should show respect for the moment. They shouldn’t be unserious.

On Wednesday, the “Occupy Oakland” occupiers rampaged through the city, shutting down the nation’s fifth-busiest port, forcing stores to close, terrorizing those residents foolish enough to commit the reactionary crime of “shopping,” destroying ATMs, spraying the Christ the Light Cathedral with the insightful observation “F**k,” etc. And how did the Oakland city council react? The following day they considered a resolution to express their support for “Occupy Oakland” and to call on the city administration to “collaborate with protesters.”

Blue, government-oriented Wall Street; the professional do-gooders and the progressive intellectual and foundation establishment; the unionized government workforce; and the beneficiaries of social programs: this is the blue coalition. Many blue partisans don’t fully get this; they think of Wall Street as the enemy without fully grasping the essential role that the financial community plays in the creation and administration of blue policy. The participation in and support of blue social and economic policies by American finance both enables and shapes those policies, and it was the belief on Wall Street in the 1940s and 1950s that the blue social model provided the most effective path for national economic development that created the postwar commonwealth, which many blue activists today hope to restore.

Friday, November 04, 2011

Herman Cain’s 9-9-9 tax plan is a case in point. My last column pointed out that his plan would hit the superrich -- those with lots of wealth, but little or no labor earnings -- right in the solar plexus, dramatically lowering their sustainable living standards. The day after the column appeared, the Tax Policy Center, a joint venture of the Urban Institute and Brookings Institution, released a widely quoted study suggesting exactly the opposite.

I’m not surprised. The Tax Policy Center has first-rate economists, but they knowingly use wholly inappropriate distribution analysis also employed by Congress’s Joint Committee on Taxation, the Congressional Budget Office, the Congressional Research Service and the Treasury’s Office of Tax Analysis.

All five groups of tax experts take annual income as a measure of a household’s economic standing and evaluate the progressivity of tax proposals by dividing annual taxes by annual income. This is problematic, in large part because people don’t live for just one year. Their incomes and the taxes on that income change over their lifetimes.

Even so, these figures don't touch the most important question: Are students getting fair value in return?

Anne Neal has been trying to help families answer that question for years. As president of the American Council of Trustees and Alumni, she believes students should leave college with a broad base of knowledge that will allow them "to compete successfully in our globalized economy and to make sense of the modern world." By that ACTA means universities should require a core curriculum with substantive courses in composition, literature, American history, economics, math, science and foreign language.

"The fundamental problem here is not debt but a broken educational system that no longer insists on excellence," Ms. Neal says. "College tuitions have risen more than 440% over the last 25 years—and for what? The students who say that college has not prepared them for the real world are largely right."

At WhatWillTheyLearn.com, students can click onto ACTA's recent survey of more than 1,000 American four-year institutions—and find out how their colleges and universities rate. Two findings jump out. First, the more costly the college, the less likely it will require a demanding core curriculum. Second, public institutions generally do better here than private ones—and historically black colleges such as Morehouse and service academies such as West Point amount to what ACTA calls "hidden gems."

In what will likely go down as one of history’s mysteries, the CIA Museum in McLean, Va., has obtained a letter from former intelligence operative Richard Helms written in 1945 on Hitler’s stationery. Helms’ son, Dennis Helms, had received the letter when he was three years old and gave it to the museum this year.